Stantec, Inc. Q4 FY2024 earnings call

• 2024 was a record year for Stantec with record net revenues of CAD5.9 billion, up 15.8% from 2023, underpinned by 7.4% organic and 7.5% acquisition growth. Adjusted EBITDA grew to CAD980 million, up 18%, with an enhanced margin of 16.7%. Adjusted EPS was CAD4.42, up over 20% from 2023.
• Backlog reached a new record of CAD7.8 billion at the end of 2024, a 24.1% increase from December 2023, driven by 9.7% acquisition and 8.5% organic growth. Organic backlog growth was strong in Canadian and U.S. operations, with Water realizing 24% organic backlog growth.
• Major projects awarded included being appointed to Thames Water's GBP400 million asset framework for AMP8 and selected by the University of Texas at Dallas for a new student housing project.

In the U.S., Q4 net revenues increased 14.1% with 10.3% organic growth; full year net revenues rose 13.3% (8.6% organic, 3.3% acquisition). Water and Buildings in the U.S. had double-digit organic growth. In Canada, Q4 net revenue grew 17.6% (9.1% organic); full year net revenue increased 14.5% (6% organic, 8.5% acquisition), with both Buildings and Water businesses experiencing double-digit organic growth. Global had Q4 net revenue growth of 32.6% (7.3% organic, 21.8% acquisition); full year net revenue growth was 23.2% (16.3% acquisition, 5.8% organic), with Global Buildings achieving 20% organic growth, Water seeing double-digit organic growth, and Environmental Services having strong organic growth from energy transition projects.

• Expect net revenue growth of 7% to 10% in 2025.
• EBITDA margin is expected to be in the range of 16.7% to 17.3%.
• Adjusted EPS growth for 2025 is expected to be in the range of 16% to 19%, above net revenue growth.

• Potential minor disruptions to projects in the U.S. due to new administration priorities, but no material impacts seen to date.
• Timing issues in Global backlog conversion, such as in New Zealand with high project burn rate on major Water projects and AMP8 contracts not fully converting to backlog yet.

Q: Sabahat Khan asks about margin guidance and moving parts affecting the margin range.

A: Gord Johnston mentions project margin and mix as key drivers, with continued focus on operational leverage, technology, and productivity. Vito Culmone adds strong proposal activity reflects robust demand.

Q: Krista Friesen inquires about Energy & Resources.

A: Gord Johnston states Energy & Resources returned to growth, backlog increased 14% year-over-year, with growth in Canada and U.S. across power and mining, and forecast for positive organic growth in 2025.

Q: Chris Murray asks about EPS guidance and intangible amortization.

A: Vito Culmone explains EPS guidance is driven by strong fundamentals, net revenue, project margin, and EBITDA margin expansion, with no modeling of acquisitions or stock buybacks.